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Indian EV Start-Ups See 117% Jump in Funding, Record Highest in a Decade

India Ranks Third in Number of EV Companies, Fourth in Funding: Tracxn Report

6 February 2023

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Jayashri Ghorpade

India produced 3X more unicorns than China in 2022.png
  • The number of companies in the Indian EV sector ranks third globally, following the US and China.

  • According to Tracxn's report, India ranks fourth in terms of funding in the electric vehicle (EV) space, following the US, China, and Sweden.

  • The latest budget includes policies that will benefit the sector, such as a customs duty waiver on capital goods and machinery for EV battery manufacturing.

A report by Tracxn shows that EV startups in India raised $1.66 billion in 2022, a 117% increase from 2021. The sector had 4 $100 million+ investment rounds in 2022, compared to 2 in 2021. Late-stage funding rose 124% to $1.02 billion and early-stage funding saw a 160% increase from $202 million to $526 million. The average early-stage investment size also increased by 112% this year.

The Indian EV space ranks fourth in funding, following the US, China, and Sweden. The top seed-stage investors in this space in India are Blume Ventures, Micelio, and GrayCell Ventures, while Tiger Global Management, Sequoia Capital, and Qualcomm Ventures are the leading early-stage investors. The biggest late-stage investors include GIC, The Rise Fund, and Tekne Capital Management.

“In the latest budget government has introduced more such policies that will surely help the sector like the customs duty on capital goods and machinery for manufacturing EV batteries has been exempted and the duty on lithium batteries has been decreased from 21 per cent to 13 per cent as part of the Union budget for 2023- 2024, which will eventually result in lower pricing and more investment in the industry,” said Neha Singh, Co-founder of Tracxn.

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Tracxn's Electric Vehicles - India Feed Geo Report showed that the rise in the Indian EV space is mainly due to a surge in late-stage funding rounds, which made up 62% of the total funding in 2022. The report provides valuable insights based on Tracxn's comprehensive database. India has the third-largest number of EV companies, following the US and China.

India hit a milestone of 1 million EVs sold in 2022, dominated by electric 2-wheelers. The rise in EV adoption is attributed to favorable government policies, growing options, and infrastructure.

“The subsidies for EV batteries have also been extended by another year. The funding for the FAME II programme has also been increased. Although there is still a long way to go until EVs are widely used in India, we believe the government's plans are wise steps that will support the industry's rapid future growth,” Singh adds.

According to the report, the sector saw a rise in $100 million+ investment rounds with four in 2022 compared to two in 2021. However, no new Unicorns were created and no IPOs occurred. The top performing business models were Electric Car Manufacturers, Electric Scooter Manufacturers, and Station Based Electric Bike Rentals.

Bengaluru has received the most investment ($2 billion) in the EV sector to date, followed by Mumbai ($525 million) and Gurgaon ($274 million) among cities.

 

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